Mortgage Applications Drop Before Fed Meeting

Mortgage demand experienced a decline of 7.2% in the week ending January 26, as reflected in the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey. Joel Kan, MBA’s Vice President and Deputy Chief Economist, noted that the decrease was driven by a decline in purchase applications, offsetting a slight increase in refinance activity. Kan attributed this trend to the limited options for prospective buyers due to low existing housing supply, resulting in elevated home-price growth and constraining overall home purchase activity.

During the mentioned week, the average loan size for purchase applications reached $444,100, marking the highest average loan size since May 2022. Kan highlighted that lower mortgage rates have contributed to homebuyers reclaiming some purchasing power.

The MBA survey reported that the average mortgage rate for 30-year fixed-rate mortgages with conforming loan balances remained unchanged at 6.78%, while rates on jumbo loans also held steady at 6.94%.

In terms of application types, purchase applications decreased by 11% on a seasonally adjusted basis compared to the previous week, while refinance applications increased by 2% during the same period. Refinances accounted for 34.2% of total applications, up from 32.7% in the previous week.

The share of total applications for the Federal Housing Administration (FHA) decreased to 13.8%, down from 14.1% the previous week. The U.S. Department of Veterans Affairs (VA) share also saw a decline to 13.3%, down from 13.7%. Meanwhile, the U.S. Department of Agriculture (USDA) share remained unchanged at 0.4%.

The MBA’s weekly survey, conducted since 1990, covers over 75% of all U.S. retail residential mortgage applications.